Russia to write off yet another African country’s debt

Russia is continuing the Soviet practice of providing cash injections to regimes in African, Latin American and Central Asian countries that are loyal to the Kremlin.

After writing off debt to Cuba, Kyrgyzstan, Tanzania and Mozambique, and providing mass assistance to Venezuela, which according to Reuters is in the region of $17 billion, Russia is preparing to forgive the debt of yet another African country.

Moscow is close to resolving the matter of Ethiopia’s remaining debt, Russian President Vladimir Putin told the TASS news agency.

The amount in question is $163.6 million which there are plans to use in the “debt in exchange for development” program. Intergovernmental agreements according to this scheme are already in place with Madagascar, Mozambique and Tanzania.

“Along the same lines, there are plans to deal with Ethiopia’s remaining debt to Russia – a draft of the relevant agreement is currently being coordinated,” the president said.

“In the post-Soviet period, the end of the 20th century, Russia wrote of $20 billion of debt to African countries,” he noted.

According to Putin, this step “was not only an act of magnanimity, but also a case of pragmatism”, because many of the African countries that had received Soviet assistance were “unable to pay interest on these loans” (quotation by TASS).

“For this reason, we considered it optimal for everyone to start cooperating with a clean slate,” the Russian president remarked.

African debts actually played a role in the collapse of the Soviet economy in the late 1980s. Faced with a crash in oil prices (1985-86), the USSR started taking foreign currency loans from the West, which it proved unable to repay. By the early 1990s, according to Yury Moskovsky, chairman of the Soviet Bank for Foreign Economic Affairs at the time, the Soviet Union had reached “foreign currency bankruptcy”.

It proved impossible to reclaim even part of the loans given to promote socialist revolutions in third world countries.

Russia’s new series of debt write-offs is linked to arms deals. At the start of September, after meeting with his Ethiopian colleague Hirut Zemene, Russian Foreign Minister Sergey Lavrov announced plans to expand Russia’s military technology cooperation with Ethiopia.

As Lavrov noted at the time, regulatory documents are being prepared to facilitate “more effective cooperation in the sphere of military product shipments”. There are also plans to cooperate with Ethiopia through the Russian Academy of Sciences.